Compass Blog

The Christmas Bills Have Arrived – Now What?

“Black Friday” was in November of last year, but for many consumers, “Black January” occurs when the Christmas bills start piling up in January.

For many people, this might be the worst time of the financial year. Most people don’t budget for Christmas spending, but they spend a lot of money anyway! And if there is no money in your budget to cover Christmas spending, those credit cards get used.

If you are the typical American, instead of creating a financial plan in January to save for Christmas, you didn’t create any special savings to cover the cost of Christmas spending–gifts, travel, decorations, extra food, and drinks.

Now it’s time to figure out how to pay for all those presents and Christmas parties. Statistics show that the average family will be paying for Christmas 2017 all the way until October 2018.

If you are facing a ton of debt from Christmas spending, it’s time to go into crisis mode. All available cash should be funneled towards paying off the Christmas debt on your credit cards.

The best thing to do is to put your credit cards in your drawer and not use them again until your Christmas debt is paid in full, otherwise you are digging a debt hole you may be able to escape. Scour each and every spending category for ways to cut back. If you are saving for something special such as a vacation, put it on hold until those Christmas bills have been paid in full.

Calculate the total of your Christmas purchases on each of your credit cards. This will tell you how much you spent on Christmas for each card. On every card where there is Christmas spending, make the minimum payment plus as much extra as you can scrape up to pay against your Christmas purchases Do this for every card that you used for Christmas spending

If you have cards that you didn’t use for Christmas spending, but they still have balances—pay only the minimum payment until your Christmas debt is paid in full.

Christmas happens every year on December 25th, so why does it catch people unprepared financially every year?

There is a great verse from Luke 14:28-30 that goes like this: “Which of you wishing to construct a tower does not first sit down and calculate the cost to see if there is enough for its completion? Otherwise, after laying the foundation and finding himself unable to finish the work the onlookers should laugh at him and say, ‘This one began to build but did not have the resources to finish.’”

So we want you to plan ahead for the resources you need for Christmas. As soon as you have the debt from Christmas 2017 paid in full, figure out how many months are left until Christmas 2018. Then divide the amount you spend on Christmas by the number of months remaining.

When you begin to purchase presents for Christmas 2018, spend only as much as you have saved! If you were only able to save $500. That’s all you can spend. It may be a lean Christmas, but it will certainly help you get ahead financially.

Once you have paid for Christmas past and begun saving for Christmas future, in 2019, you can save each month to pay for Christmas and avoid the huge credit card bills in January.

After you get a handle on Christmas debt, you can tackle the rest of your credit card debt. Begin by taking the money you were using to pay down the Christmas debt and apply it to the smallest credit card balance. Once that is paid off, tackle the next smallest balance.

This process will help you pay off old debt and avoid new debt.

Even ants know how to plan ahead. Listen to this verse from Proverbs 6:6-8: “Go to the ant, O sluggard, study her ways and learn wisdom; For though she has no chief, no commander or ruler, She procures her food in the summer, stores up her provisions in the harvest.”

If ants are smart enough to save ahead, aren’t we?

You may think you deserve to spend a lot of money on Christmas, or you may think that you need to buy everyone you know a nice present, but it’s more important to live within your means.